London financier Nat Rothschild is preparing to increase tensions with Indonesia's powerful and controversial Bakrie family by fighting a proposal to sever their embittered tie-up at Bumi plc, the London-listed mining investment vehicle they co-founded two years ago.

It is understood that the scion of the banking family believes a deal proposed by the Bakries is an attempt to acquire Bumi's assets on the cheap - a view which emerged after a day in which the proposal caused Bumi's flagging share price to jump by 40% on hopes of a settlement.

After months of feuding, the politically-connected Indonesian mining family said it would offer $1.29bn of cash in return for Bumi plc's mines and for cancelling its own shares in the London-listed investment vehicle.

The Indonesians also spiced up their proposal with a separate suggestion that Rothschild should give up a stake in Bumi plc worth upwards of £40m. The announcement came after the London-listed group launched an inquiry last month into allegations of wrongdoing at its Indonesian coalmining operations, including PT Bumi Resources, one of the Bakries' most prized holdings in which Bumi plc holds a 29% stake.

Shares in Bumi plc, which have crashed since floating at £10, gained more than 40% on the news to 261.55p, suggesting shareholders would welcome selling out at less disastrous terms than feared.

One major investor told Reuters: "We are disappointed because there are some absolutely fantastic assets in Indonesia. The current proposal, if the Bakries have the money to go through with it, would lead to potential return of just under £5 a share. That is a disappointing outcome, but it is not as catastrophic as it was."

However, despite the share price leap, Rothschild is understood to believe that the announcement is a cynical tactic by the Bakries, who have hired Ian Hannam, the banker who suggested the original deal to Rothschild, as their main adviser. The British financier is understood to be telling his inner circle that the Bakries' proposal would circumvent takeover rules as Bumi plc shareholders Rosan Roeslani, who holds 13%, and Samin Tan, an Indonesian billionaire who pulled the highly indebted Bakries back from default last year with a $1bn investment, have close ties to the Bakries. Tan, however, is said by many to have fallen out with the family.

In an official statement, Rothschild said: "Even if the Bakries exit, one of the key concerns that I share with other minority investors is that Bumi plc would still face a concentration of ownership by a small number of closely-related parties and such challenges would remain."

A deal is not agreed. Bumi plc said it was consulting shareholders before making any decisions, while analysts questioned how positive shareholders would eventually be.

The Bakries' complex proposal involves the family cancelling its stake in Bumi plc in exchange for buying back the London-listed vehicle's stake in the family's mine. The Bakrie family could then buy Bumi plc's entire 84.7% stake in another Indonesian coal asset, Berau, for $946m.

David Butler, a mining analyst with Barclays, said: "I think it is highly unlikely that it will go through in all phases, as shareholders will want to retain exposure to coal. But I can see the sense in the first two steps if the Bakries' influence [in Bumi plc] is removed."

In 2010 Rothschild listed a cash shell called Vallar – which was then renamed Bumi plc after its most important asset – to acquire mining assets in emerging markets. His sales pitch to investors was that he would bring western standards of corporate governance to otherwise risky investments. However, the weakness in his argument - that Bumi plc did not hold a controlling stake in its most important asset - was very quickly exposed and the relationship between Rothschild and the Bakries became irreparably soured.

If the Bakries' proposals are accepted, it would leave Bumi plc as a shell with no assets other than $1.29bn in cash. Analysts said the cash would then probably be returned to shareholders and Bumi plc wound up.